FIRST INVESTORS EQUITY FUNDS
FIRST INVESTORS LIFE SERIES FUNDS
SUBADVISORY AGREEMENT
Agreement made as of this 27th day of January, 2006, by and among FIRST
INVESTORS MANAGEMENT COMPANY, INC., a New York corporation (the "Adviser"),
PARADIGM CAPITAL MANAGEMENT, INC. (the "Subadviser"), FIRST INVESTORS EQUITY
FUNDS and FIRST INVESTORS LIFE SERIES FUNDS, ( each a "Fund"), each a Delaware
statutory trust and a diversified open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), on behalf of First Investors Special Situations Fund and First Investors
Life Series Discovery Fund, respectively.
W I T N E S S E T H:
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated
January 27th, 2006 (the "Advisory Agreement") with the Funds, pursuant to which
the Adviser acts as investment adviser of each series of the Funds; and
WHEREAS, the Adviser and the Funds each desire to retain the Subadviser to
provide investment advisory services to First Investors Special Situations Fund,
a series of First Investors Equity Funds, and First Investors Life Series
Discovery Fund, a series of First Investors Life Series Funds, , and the
Subadviser is willing to render such investment advisory services.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
1. SUBADVISER'S DUTIES.
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(a) PORTFOLIO MANAGEMENT. Subject to supervision by the Adviser and the
Funds' Board of Trustees, the Subadviser shall manage the investment operations
and such portion of the assets of First Investors Special Situations Fund and
First Investors Life Series Discovery Fund (each a "Series") that is allocated
to it by the Adviser, in accordance with that Series' investment objectives,
policies and restrictions, and subject to the following understandings:
(i) INVESTMENT DECISIONS. The Subadviser shall determine from time
to time what investments and securities will be purchased, retained, sold or
loaned by each Series, and what portion of such assets will be invested or held
uninvested as cash.
(ii) INVESTMENT LIMITS. In the performance of its duties and
obligations under this Agreement, the Subadviser shall act in conformity with
applicable limits and requirements, as amended from time to time, as set forth
in (A) each Fund's Declaration of Trust, as amended and restated from time to
time, its By-Laws, and the Prospectus and Statement of Additional Information
applicable to the Series, (B) instructions and directions of the Adviser and of
the Board of Trustees of the Funds, and (C) requirements of the 1940 Act, the
Internal Revenue Code of 1986, as amended, as applicable to each Series, and all
other applicable federal and state laws and regulations.
(iii) PORTFOLIO TRANSACTIONS. With respect to the securities and
other investments to be purchased or sold for each Series, the Subadviser shall
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place orders with or through such persons, brokers, dealers or futures
commission merchants selected by the Subadviser, provided, however, that such
orders shall (A) be consistent with the brokerage policy set forth in the
Prospectus and Statement of Additional Information applicable to each Series, or
approved by the Funds' Board of Trustees, (B) conform with federal securities
laws, and (C) be consistent with securing the most favorable price and efficient
execution. Within the framework of this policy, the Subadviser may consider the
research, investment information and other services provided by, and the
financial responsibility of, brokers, dealers or futures commission merchants
who may effect, or be a party to, any such transaction or other transactions to
which the Subadviser's other clients may be a party.
On occasions when the Subadviser deems the purchase or sale of a security or
futures contract to be in the best interest of a Series as well as other clients
of the Subadviser, the Subadviser, to the extent permitted by applicable laws
and regulations, may, but shall be under no obligation to, aggregate the
securities or futures contracts to be sold or purchased in order to obtain the
most favorable price or lower brokerage commissions and efficient execution. In
such event, allocation of the securities or futures contracts so purchased or
sold, as well as the expenses incurred in the transaction, will be made by the
Subadviser in the manner the Subadviser considers to be the most equitable and
consistent with its fiduciary obligations to the Funds and to such other
clients.
(iv) RECORDS AND REPORTS. The Subadviser shall maintain such books
and records required by Rule 31a-1 under the 1940 Act as shall be agreed upon
from time to time by the parties hereto, and shall render to the Funds' Board of
Trustees such periodic and special reports as the Board of Trustees of the Funds
may reasonably request.
(v) TRANSACTION REPORTS. The Subadviser shall provide the custodian
of each Series on each business day with information relating to all
transactions concerning a Series' assets and shall provide the Adviser with such
information upon the Adviser's request.
(vi) FUND POLICIES. The Subadviser will comply with all policies and
procedures of the Funds, including the portfolio holdings information policy.
(vii) SIGNIFICANT EVENTS. The Subadviser will monitor the securities
owned by the Funds for potential significant events that could affect their
values and notify the Funds when, in its opinion, a significant event has
occurred that may not be reflected in the market values of such securities.
(b) SUBADVISER'S DIRECTORS, OFFICERS AND EMPLOYEES. Services to be
furnished by the Subadviser under this Agreement may be furnished through any of
its directors, officers or employees. The Subadviser shall notify the other
parties to this Agreement of any change in the Subadviser's management or
ownership within a reasonable time after such change.
(c) MAINTENANCE OF RECORDS. The Subadviser shall timely furnish to the
Adviser all information relating to the Subadviser's services hereunder which
are needed by the Adviser to maintain the books and records of each Series
required by Rule 31a-1 under the 1940 Act. The Subadviser agrees that all
records that it maintains for each Series are the property of the Funds and the
Subadviser will surrender promptly to the Funds any of such records upon the
Funds' request; provided, however, that the Subadviser may retain a copy of such
records. The Subadviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required to be maintained
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by it pursuant to paragraph 1(a) hereof.
(d) FIDELITY BOND, ERRORS & OMISSIONS POLICY, AND COMPLIANCE PROGRAM.
The Subadviser will provide the Funds with reasonable evidence that, with
respect to its activities on behalf of each Series, the Subadviser is (i)
maintaining adequate fidelity bond and errors & omissions insurance, (ii) has
adopted a compliance program that meets the requirements of the federal
securities laws, including all required codes of ethics, and (iii) has
designated a Chief Compliance Officer in accordance with the requirements of the
federal securities laws. The Subadviser shall also make such compliance reports
and certifications as are required by the Funds' compliance program.
2. ADVISER'S DUTIES. The Adviser shall continue to have responsibility for
all other services to be provided to the Funds and each Series pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement.
3. DOCUMENTS PROVIDED TO THE SUBADVISER. The Adviser has or will deliver to
the Subadviser current copies and supplements thereto of each of the following
documents, and will deliver to it all future amendments and supplements, if any:
(a) the Declaration of Trust of each Fund, as filed with the Delaware
Secretary of State;
(b) the By-Laws of each Fund;
(c) certified resolutions of the Board of Trustees of each Fund
authorizing the appointment of the Adviser and the Subadviser and approving the
form of this Agreement;
(d) each Fund's Registration Statement on Form N-1A under the 1940 Act
and the Securities Act of 1933, as amended ("1933 Act"), pertaining to the
Series, as filed with the Securities and Exchange Commission; and
(e) the Prospectus and Statement of Additional Information pertaining to
each Series.
4. COMPENSATION OF THE SUBADVISER. For the services provided and the
expenses assumed pursuant to this Agreement, the Adviser will pay to the
Subadviser, effective from the date of this Agreement, a fee which is computed
daily and paid monthly from each Series' assets at the annual rates set forth in
the attached Schedule A. If this Agreement becomes effective or terminates
before the end of any month, the fee for the period from the effective date to
the end of the month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the proportion
that such month bears to the full month in which such effectiveness or
termination occurs.
5. LIABILITY OF THE SUBADVISER. The Subadviser agrees to perform faithfully
the services required to be rendered to the Funds and each Series under this
Agreement, but nothing herein contained shall make the Subadviser or any of its
officers, partners or employees liable for any loss sustained by the Funds or
its officers, Trustees or shareholders or any other person on account of the
services which the Subadviser may render or fail to render under this Agreement;
provided, however, that nothing herein shall protect the Subadviser against
liability to the Funds, or to any of the Series' shareholders, to which the
Subadviser would otherwise be subject, by reason of its willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this Agreement. Nothing
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in this Agreement shall protect the Subadviser from any liabilities that it may
have under the 1933 Act or the 1940 Act.
6. DURATION AND TERMINATION. Unless sooner terminated as provided herein,
this Agreement shall continue in effect for a period of more than two years from
the date written above only so long as such continuance is specifically approved
at least annually in conformity with the requirements of the 1940 Act; provided,
however, that this Agreement may be terminated at any time, without the payment
of any penalty, by the Board of Trustees of each Fund or by vote of a majority
of the outstanding voting securities (as defined in the 0000 Xxx) of the Series,
or by the Subadviser at any time, without the payment of any penalty, on not
more than 60 days' nor less than 30 days' written notice to the other parties.
This Agreement shall terminate automatically in the event of its assignment (as
defined in the 0000 Xxx) or upon the termination of the Advisory Agreement.
Termination of this Agreement with respect to a given Fund shall not affect the
continued validity of this Agreement or the performance thereunder with respect
to the other Fund.
7. SUBADVISER'S SERVICES ARE NOT EXCLUSIVE. Nothing in this Agreement shall
limit or restrict the right of any of the Subadviser's partners, officers or
employees to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any business, whether of
a similar or a dissimilar nature, or limit or restrict the Subadviser's right to
engage in any other business or to render services of any kind to any other
corporation, firm, individual or association.
8. REFERENCES TO THE SUBADVISER. During the term of this Agreement, the
Adviser agrees to furnish to the Subadviser at its principal office all
prospectuses, proxy statements, reports to shareholders, sales literature or
other material prepared for distribution to sales personnel, shareholders of
each Series or the public, which refer to the Subadviser or its clients in any
way.
9. EXCLUSIVITY. The Subadviser agrees not to manage the assets of any
non-affiliated third party investment company that has investment objectives and
policies substantially similar to the investment objectives and policies
employed by either Series.
10. AMENDMENTS. This Agreement may be amended by mutual consent, subject to
approval by the Funds' Board of Trustees and each Series' shareholders to the
extent required by the 1940 Act.
11. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of New York.
12. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior agreements and
understandings relating to the subject matter hereof.
13. SEVERABILITY. Should any part of this Agreement be held invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
14. THE 1940 ACT. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule, regulation or
order of the Securities and Exchange Commission, whether of special or general
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application, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
15. HEADINGS. The headings in this Agreement are intended solely as a
convenience, and are not intended to modify any other provision herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
FIRST INVESTORS MANAGEMENT COMPANY, INC.
Attest:
/s/ Xxxxx Xxxxxx Xxxxx By: /s/ Xxxxxxx X. Head
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Xxxxx Xxxxxx Xxxxx, Assistant Xxxxxxx X. Head, Chairman & President
Secretary
FIRST INVESTORS EQUITY FUNDS, on behalf
of First Investors Special Situations Fund
Attest:
/s/ Xxxxx Xxxxxx Xxxxx By: /s/ Xxxxxxx X. Head
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Xxxxx Xxxxxx Xxxxx, Assistant Xxxxxxx X. Head, President
Secretary
FIRST INVESTORS LIFE SERIES FUNDS, on
behalf of First Investors Life Series
Discovery Fund
Attest:
/s/ Xxxxx Xxxxxx Xxxxx By: /s/ Xxxxxxx X. Head
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Xxxxx Xxxxxx Xxxxx, Assistant Xxxxxxx X. Head, President
Secretary
PARADIGM CAPITAL MANAGEMENT, INC.
Attest:
/s/ Xxxxxxxxx Xxxxxx By: /s/ Xxxxxxx Xxxx Xxxx
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Xxxxxxxxx Xxxxxx, Assistant Xxxxxxx Xxxx Xxxx, Chief Executive
Officer
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SCHEDULE A
The fee paid to the Subadviser under this Agreement for managing that portion of
the assets of First Investors Special Situations Fund allocated to it by the
Adviser shall be computed in the following manner.
1. The daily net assets of First Investors Special Situations Fund and
First Investors Life Series Discovery Fund shall first be added
together;
2. An aggregate fee shall then be computed on the sum as if the two
Series were combined using the following schedule: a. 0.40% of the
first $50 million; b. 0.30% of the next $200 million; and c. 0.25% on
the balance over $250 million.
3. The fee payable under this Agreement with respect to the First
Investors Special Situations Fund shall then be computed by
multiplying the aggregate fee by the ratio of the net assets of First
Investors Special Situations Fund to the sum of the net assets of
both Series.
The fee paid to the Subadviser under this Agreement for managing that portion of
the assets of First Investors Life Series Discovery Fund allocated to it by the
Adviser shall be computed in the following manner.
1. The daily net assets of First Investors Life Series Discovery Fund
and First Investors Special Situations Fund shall first be added
together;
2. An aggregate fee shall then be computed on the sum as if the two
Series were combined using the following schedule:
a. 0.40% of the first $50 million; b. 0.30% of the next $200 million;
and c. 0.25% on the balance over $250 million.
The fee payable under this Agreement with respect to the First Investors Life
Series Discovery Fund shall then be computed by multiplying the aggregate fee by
the ratio of the net assets of First Investors Life Series Discovery Fund to the
sum of the net assets of both Series.
Dated: January 27, 2006
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